Using a data table in Excel, perform a sensitivity analysis on the simple three-decision, three-outcome example. Specifically,

Question:

Using a data table in Excel, perform a sensitivity analysis on the simple three-decision, three-outcome example. Specifically, continue to assume that outcomes O1 and O2 are equally likely, each with probability p. Because the probabilities of all outcomes must sum to 1, the probability of outcome O3 must be 12p. Let p vary from 0 to 0.5, in increments of 0.05.

How does the optimal EMV vary? How does the optimal decision vary? Why can’t p be greater than 0.5?

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